Half Year 2021 Umicore SA Earnings Call
Hello, gentlemen, and you're ready to start.
That's about right and you are.
Okay, I'm going to connect you know to the call you're going to hear a little pizza and music and stopped and music I will do the introduction and then David you 1 moment. Please.
[music].
Okay.
Good morning, ladies and gentlemen, and welcome to the Umicore half year free schools 2021conference call.
At this time all participants are in listen only mode until we conduct a question and answer session and instructions will be given at that time.
If anyone should require assistance during the call you can press Star then zero on your telephone keypad and just to remind you. All this conference call is being recorded.
And I'd like to hand over to Mr. Mark Greenberg.
And I'll see you and Mr. Philippe to see fits here for Mr. Greenberg. Please go ahead Sir.
Thank you Barbara.
Good morning, everyone of them, well and personal loans.
First of all for this year.
And then over time and public domain.
That's.
But because 1 year before and all too.
And then go through the financials.
All of them for all.
For your question.
Looking at the highlights for both of our results, which we achieved and the first half of the year and which was driven by exceptionally.
As 1 of their total cost across the business rules.
Revenues were up 7% year on year, adjusted EBIT was up by 157% and the return on capital employed exceeded 28%.
We're looking at zero and year comparison, 1 for.
And that has been very long debt all results in the first half of last year, where it hasn't been impacted by the severe downturn and most of our end markets, particularly in the automotive industry.
Results from the COVID-19 pandemic.
Also our results for the first half of this year.
Here were boosted by extremely high prices for certain precious metals.
While the pandemic is unfortunately, not behind us yet the recovery, which took shape and the second half of last year has got to see and and the first half. This year, we benefited from a sharp upturn.
Turning demand across businesses in particular from here at the motive industry.
And this was combined with a robust operational performance, which also contributed to reaching all time high results.
Revenue and earnings and the first half grew across all.
The 3 segments.
And catalysis, we continued to outperform to a commodity market and this by a significant margin.
And energy and surface technologies, we saw substantial growth and the sales volume of cathode materials as anticipated combined with very strong demand.
And in the other activities.
And recycling, we achieved a record performance.
Driven by record precious metal prices and strong demand across end markets and regions.
Excellent supply and trading conditions.
I would also like to find out debt.
Our cash flow increased substantially and Philip will elaborate on this topic and a moments.
As we announced in February we have amended the visitor policy and the interim dividend will from now on consist of a fixed amount of 25 zero cents per share.
Interim dividend will be paid out on 24 August.
Our policy of a stable to growing full year dividend remains unchanged.
Looking ahead now I expect adjusted EBIT for 2021 to come up from slightly above 1 billion Euro assumed.
This expense metal prices stay more or less around their current levels.
You will recall, a vector and aircrew unexpected for the year adjusted EBIT to approach 1 billion Euro.
And the slight increase in guidance reflects stronger than anticipated performance in the first half of the year.
And this was primarily due to the spike and precious metal prices and very strong demand and cabos and specialty materials and metals and position.
Solutions.
And then we indicated that the boost from precious metal prices compared to 2020 was about 250 million.
And based on the current prices this is citibank.
Yes.
And we also explained and therefore adjusted EBIT for the second half of the year is expected to be lower and the first half taking into account the planned maintenance shutdown of the smelter and the Hoboken recycling facility.
And Julie starting mid September.
The first half of 2021 offering through the the spike and precious metal prices for.
And the outlook assumes flat prices in the second half.
Finally, we expect automotive production and the second half to be hampered by the global shortage.
And semiconductor chip supply.
And catabasis I expect that we will continue to outperform here for mortgage market.
And Thats, we will more than double adjusted EBIT this year compared to 2020.
Revenues and earnings and the second half of the year.
For the impacted by more subdued demand in the automotive industry due to the ongoing shortage and semiconductors.
In addition, and as anticipated heavy duty diesel and gasoline sales volumes are expected to be lower from the second half compared to the first half of this year.
However, the phase out of China, 5 combined capital.
In energy and surface technologies I expect the full year adjusted EBIT will grow meaningfully and may slightly exceed the current market consensus.
We should bear in mind zone.
For the stronger than anticipated performance.
Total and cobos and specialty materials and metal deposition solutions and the first half is expected to normalize and should therefore not be extrapolated to the second half.
And rich out of them.
And materials I expect substantial growth and steady volume of cathode materials. This year.
To more than compensate the anticipated 60 million and Europe increased and fixed costs versus last year.
And recycling, we are off to a new record performance with adjusted EBIT and 21 expected to be well above the previous record level of last year.
And I expect this record performance to be achieved from a combination of very high precious metal prices for August operations excellent supply and strong growth across business units and regions.
Okay.
The first half performance should not be extrapolated to the second hospital assets.
Despite and precious metal prices seen in the first half is not assumed to reoccur and the second half and the smelter and Hoboken will undergo a planned maintenance shutdown as of mid September.
Before moving onto the business for you I would like to repeat some of the key messages.
Just of the ambitious let's go for zero sustainability strategy that we announced early June.
As a longstanding pioneer and sustainability, we have reaffirmed our commitment to sustained industry leadership by setting truly bold ambitions and thereby raising the bar.
Both for ourselves and our industry.
By both I mean that we go for zero.
Net zero greenhouse gas emissions by 2035 zero day in quantity and zero harm.
The ambitions that we have set ourselves are stretched FERC from promos because these other license.
Institute.
Also a growing number of customers and corporate sustainability criteria in their supplier selection process and our sustainability performance and trajectory are becoming grids are competitive advantages.
I would also like to remind you that.
Availability excuse me for is not only about many margin the impact of our operations.
And is also about having a positive impact by making best use of our capabilities to address 2 per cargo challenges such as the need for cleaner mobility or circular economy.
So, let's now turn to the business speaking.
Slide 8 recap of the key figures for the first half of 2021 trillion with distributed will comment in more detail in a moment.
And therefore for close to turn immediately to comparison.
Copper production has continued to recover from the loans.
And the first half of last year.
The graph on the slide 10 shows the market development month by month against the previous 2 years.
You can clearly see the severe impact of the pandemic last year, followed by a strong rebound now.
Although we are not yet back.
Pre price levels global car production across powertrain was up 30% from the first half of 2021.
Offer volume first quarter sequential growth and cost reduction and Q2 reflected and initial impact of the global semiconductor brokerage and.
And this impact is expected to persist and the second half of the year.
Without this shortage affecting production at our customers.
The growth of automotive catalyst and from the first half with it being even even losses.
This brings me to the next slide where you see that.
And Kevin says revenues were up by 59% year on year.
Adjusted EBIT stood at 200, 400, and euro compared to 21 million Euro and the same period last year.
And this was supported by very strong revenue growth as well as cost savings and higher PGM prices.
And because of this particular situation of your commodity industries and the first part of last year and.
For comparison to 2019, maybe more relevant and the growth and adjusted EBITDA from 87 million euros, 2 years ago to $204 million. This year speaks for itself.
And also.
Promoted carefully we substantially outperformed the automotive market both in volumes and revenues.
This was primarily the result of market share gains and a favorable platform mix, especially in the European and Chinese light duty gasoline markets.
We also continued to benefit.
<unk> from the shift away from dealers and in Europe for deals that accounted for just 30% of the mix and the first half from this year.
And heavy duty diesel we recovered very strong demand for our China 5 Catharine its technology and the first half ahead of the nationwide adoption of the new.
And China, 6 emission norm and July.
And within the transportation sales volumes before and through that carefully nearly doubled year on year, driven by very strong demand in China, and Korea, and significant customer wins and the first half of per year.
And the precious metals chemistry activities, we recorded strong demand for our James Catherine and.
And also benefited from the very high precious metal products.
And energy and surface technologies, we benefited from accelerating growth and demand for EV batteries driven.
Driven by very strong traction in Europe, and some recovery of demand and China.
Against this backdrop sales volume of unit cost NMC cathode materials to power and Dean we're.
For substantially higher profitability in Europe, with strong growth year on year and sequentially.
Cobalt and specialty materials benefited from a stronger than anticipated post COVID-19 recovery, especially for cobalt and nickel chemicals and food materials.
And metal deposition solutions recorded strong demand across key end markets.
These positive demand dynamic.
We are however, largely offset by a much lower contribution from Docomo refining activities.
Due to unfavorable pricing conditions for cobalt and put materials.
Currencies also had a negative impact from revenues of roughly 25 from against Euro.
Overall.
Revenue for the business groups and business group increased by 7% year on year and adjusted EBIT was high and was 44% higher.
And the top line growth combined with cost savings and cobalt and specialty materials more than compensated for the anticipated increase and fixed costs.
Dynamic related to the expansion and cathode materials and the setup and R&D programs.
We have recently commissioned our run and new cathode materials plant and Mr. <unk>.
This plan is the very first industrial scale cathode material production plant in Europe.
And.
And we are obviously very proud of debt and with onsite and happy that we have made the investment decision and 2018, so definitely be ready to move to mass production in Europe at the time the market is gaining significant traction.
We will now start the qualification of production line with our customers.
And I expect first commercial production volume to kicking around year end.
I'm also proud that we have entered into a long term power purchase agreement with engie to supply all our plans and performance.
And as a percent renewable electricity as of the start of production.
This means that the production level of cathode materials, and Europe will be carbon neutral from the spa, which sets US well ahead of our peers and is an important test and our ambitious path to actually be net of the European House gas emissions for the group by 2030 from.
Moving on to the recycling business group, you can see and the graph on slide 13, net fees continued to benefit from an exception municipality and metal price environment, especially for PGS.
Roger and Palladium and Fox.
Net volume and funding and recorded all time high and the first half of 2021.
And 1.
Although the second quarter proved to be a more qualified.
Rick and his team Jordan price from the first half of 2021 more than doubled compared to the first half for 2020.
And and the excellence of urban and hedges you Nicolas could be exposed to these favorable price evolution.
And while we had locked and a significant portion of the Canadian and similar exposure. The average received price and the first half of the year.
It was.
Well above the levels of the previous year.
Yes.
Higher metal prices explained to the largest expense the increase in revenue.
Earnings and recycling.
And although they are not the only for axis.
And precious metals refining our supply and this remains excellent and highly rich and PGM content.
And so the operational performance for robust, which enables us to process as much volume as last year.
And as you might recall, we have adapted our capacity and capability to be able to treat more of these PGM reached materials and considering the current fleets we have been operating at optimal capacity.
And jewelry and and industrial metals.
We benefited from a strong uptake and demand for investments and jewelry products and finding precious metals management took advantage of the metal price productivity and to generate significantly higher earnings.
I will now hand over to Filip, who will provide more color on the financials.
Mark and good morning, everybody.
As you've seen from the key financials at the start of this presentation and group's financial performance for the first half of the year was exceptional and the history of our company.
A number of drivers from perched, resulting in record earnings and maintenance of our strong holdings.
Thank you for close to all of our businesses.
Precious metal prices and cost savings from the recent footprint adjustments.
These together far outweighed some earnings headwinds suggests adverse currency rate movements high raw material costs, such as for cobalt and higher fixed cost related.
<unk> for 2 expansion projects and additional R&D initiatives.
And that the results are particularly important to our group margins given day contributes and acquired direct way for them.
Bottom line.
And this is also what you can see reflected and the drops from this first slide.
Recycling was obviously the main.
<unk> and <unk>.
<unk> generated very strong trading results on the back of higher metal price volatility.
Depreciation charges on group level were only slightly up year on year, resulting in an adjusted EBITDA trend that's matched adjusted EBIT.
Looking.
And for the full P&L.
The operational line clearly dropped to trend.
Adjusted net financial cost for a somewhat higher due to higher interest and for ex charges. The first half of last year did not yet incorporate the charges related to the 500 million euros and festival bumps that we issued mid year.
Looking at the adjusted tax charges increased proportionately to the pretax for.
And as reflected in net flow and stable effective adjusted tax rate of 24, 9%.
This resulted in an adjusted net result for the group of 428 million euros, and and adjusted earnings per share of.
7 to 8 euro close to 3 times for first half 2020 numbers.
We recorded a total adjustments to net results of -28 million euros, which I will detail for you and the minutes.
Looking now at cash flows.
And half of the record 8.
136 million euros cash flow from operations generated and the period was converted into net free cash flow and allow us to reduce net financial debt by 374 million for.
From $1.4 billion and a 2020 to slightly over 100 and in Europe and in June.
This.
This corresponds to slightly less than 1 turn of the last 12 months adjusted EBITDA.
Net interest charges.
Cash taxes, and dividends combined corresponding to a cash out of 240 million euros.
After a lower dividend payout from 2020 due to the COVID-19.
And that deep Opex and <unk>.
<unk> dividend payout for the periods returned to pre pandemic levels.
This next slide details the underlying trends of our operating cash flows.
Cash flow from operations and the first half came in at a record 8 from about 36 million euros and this included a.
Decrease and cash working capital of 30 million for the group over the period.
However, this reduction includes approximately $250 million euros of temporary positive cutoff effects at the end of June.
Our seem to reverse and the second half of this year.
And the buying this the combination of strong.
<unk> loans anti and much of price this substantially increased working capital needs and catalysis as was anticipated.
This increase was more than offset by a decrease in working capital and energy and surface technologies as well as and recycling.
Cash spent on Capex and capitalized.
Development costs amounted to 180 million euros compared to 167 million euros over the same period in 2020.
As in recent years E and S. T accounted for approximately 2 thirds of group Capex.
With the rechargeable battery materials Greenfield plant in Poland.
For the project.
For the full year. We currently expect the group Capex of close to 500 million euros with most of this amount already committed.
This final slide provides some detail and the previously mentioned adjustments.
The most significant adjustment to EBIT consists of reform.
For 41 million euros increase of the provision.
Set up last year and recycling for the creation of a green zone neighbor and our cohorts.
Increased.
The higher net.
We expect.
Hum.
Right.
Next to that catalysis recognized negative adjustment.
And with the Euro.
Okay.
For mortgage assets.
Plan.
And Keith.
Tenants.
However.
This adjustment and capacitors.
That's fair.
Yes.
Perfect.
Strictly volume.
And Supreme Court not specifics.
EBIT adjustment amounted to 32.
Okay.
Yes.
Relative to next day.
And in Europe.
Hum.
And that's repeatable.
Oh.
Yes.
<unk>.
This concludes my section and I'll hand back over to you.
Thank you.
Before opening the line for your questions I would like to recap the key messages of this call.
And I'm proud of the outstanding performance achieved performance achieved and the first half of this year with significant revenue and earnings growth and all business groups. As a result of strong demand records precious metal prices and Robert corporations.
The outstanding performance of the first half allowed.
Slightly raised the guidance for the full year by.
And now expect adjusted EBIT for the full year to slightly exceed 1 billion euro assuming precious metal prices and more or less where they are today.
I'm also proud of our ambitious sustainability roadmap, which is true and setting us apart.
Considering the bar both for ourselves and for our industry.
It reaffirms a clear commitment to make best use of our capabilities to address key supply for the challenges such as the need for clean mobility and the need for a circular economy.
In recent months the.
And as revenue trends, which underpin our strategy has continued to get stronger and.
This is evidenced by a number of developments such as the EU fit for 55 commitments to reduce future emissions by 55% by 2030 as part of the European Green deal.
And China.
Fundamentally as a similar commitment to achieve a carbon neutral economy by 2061 and the U S. The recent for needs of support programs and incentives for cleaner mobility has been unleashed a meaningful acceleration of car electrification expense.
Globally, our growing number of chemical and gas.
Our second net investments to electrify their offering faster.
They are also making new commitments toward achieving carbon neutrality across their supply chain.
Beyond the outstanding performance of this year the good news for debt Umicore has the talent the technology.
And while we go to closer to a business model and the sustainability and mindset, which are required to capitalize on these trends.
Finally on a more personal loans you have probably taken note debt much estimate and <unk> will take over as CEO of Umicore on October 1.
And for this year.
This means that today marks my last earnings call for Umicore and I would like to use this occasion to thank you for your long standing interest for the company for your support and for the enrich and the interactions that we've had over the years.
It has been a privilege to be unit cost since 2000.
And in Asia, and our main Unicorn and very good hands and October.
With this I would now like to open the floor for your questions and I hand over the call back to Barbara.
Thank you Sir.
We can we ask you to ask 1 question.
Question at this time and should you have further questions you can always crestar 1 again.
And Q again and.
Ask a quick question you have to press star followed by 1 on your telephone keypad.
And then that's followed by 1.
To ask a question and.
From 2.
For the question.
Thank you.
Yeah.
Ladies and gentlemen, we're waiting for this to us.
And people who registered a question too.
So once again, it's still want to register for question and.
Oh first question comes from the line of modest share Chowdhry from Citi. Please go ahead your question.
Alright, Thank you for taking my question.
I just thought for the 1.
Hum.
On the chart that you showed about the L.
L D V production rates by month.
And given that the IHS for hospitals to be down year on year for the second half do you think we can expect the how does this business to grow and the second half here and here or is it really had been from the kind of debt.
Chip shortages and be a bit too strong.
But for US it's equal for the second half. Thank you.
And my numbers here.
The and <unk>.
For many accounts per day with any degree of a courtesy of the for chips and stroke.
Brokerage is.
We're creating some unpredictable situation.
And we said there'll be a day or the car manufacturers.
And sometimes for Luna unpredictable.
And predictable mix effects as well I would say that from a volume orders you car production is unlikely to go up and pay for the second half of last year.
You may recall that there was a strong rebound.
Already is and the second half of last year and.
And global car production flowing.
And if some weighted catching up.
On the orders following the and damage.
Total of the frozen off as far as good and we are concerned.
And I would like to remind you that.
Next due to volume or earnings evolution is also driven by some other.
Structural factors.
Such as the positive effects from the footprint optimization.
The cost savings debt.
And we have achieved over the past years, and which are contributing and.
And the visit of minor to the performance and we continue to do so and for the catalysis business group and Tani.
Effect of the higher PGM prices and our assumption at least.
And Ted 2.2 last year. So all you know I think that's yeah, I can reaffirm with a high degree.
And then.
We expect to have to demo.
Adjusted EBIT for the full year.
And in flight and indeed, a continued strong performance and the second half, albeit not as strong and the first half for given P. M S.
Fact of the chip shortage on cost reduction.
Thank you that's helpful.
Our next question comes from the line of Alex Stewart from Barclays. Please go ahead with your question.
Hello, and good morning.
1 day, possibly you could kind of weathered the sequential volume growth and cathode materials in the first half a day.
Okay.
And mostly or entirely down to improvements in China, and whether you also saw a sequential improvement in Europe I asked because I thought that your Korean cause for the pieces sold out end of last year.
Just trying to figure out and you manage to get more out of price half on half it would be very helpful and.
This year kind of keep for my second question.
And good morning, Alex it's a combination of both.
Wade.
It's some recovery in Europe, and sorry, if some recovery in China, although I have to say that in China.
And we didn't grow as much as the market did.
And I'll go and because of how we are positioning the market and mix of our Oh programs and the fact that some of the.
The significant growth for loss to actually captured by a lower range and if the vehicles, which are up and platform, which shouldn't we don't serve.
Hum.
China and Europe.
Europe and are indeed.
Thank you.
Okay.
And our next question comes from the line of.
Sebastian Bray from Darren and Bank. Please go ahead with your question.
Yes, good morning, and thank you for taking my question, it's from the catalysis segment.
Looking at the 22% EBIT margins for H, 1 and the <unk>.
And there's 2 parts why with higher P. G M lead to a higher margin in this area and I haven't quite grasp.
Off the top of pass through works in the non auto cats pot.
And secondly, more conceptually given this business is benefiting from.
A number of a tailwind in 2020, 1 including high P. G M exceptional utilization and H 1.
Do you think 2021 could feasibly.
Mark Peek EBIT over the next few years for this business. Thank you.
Hum.
On the the PGM and impact some of the non.
And automotive catalyst businesses and the margin sort of.
Pricing formula.
For their products, which are.
Related to the PJM process, and the hydro pizza and bonds with the higher.
And so the margin that we make them and so some of these projects.
So.
And it was and there was more than the catalyst business that we have.
Sure.
So our model indeed.
Secondly in terms of the margin it's difficult to make out what.
So I expect in the coming years in terms of margin performance if you read the.
Industry projections the market projections.
And for the next couple of.
Most if not all the industry analyst for.
<unk>, a further growth and boardrooms and oxy production and 2022.2023, which.
And which would bode really well for for the business and would not point.
A beach.
This year or non repeatable and module level achieved for this year. So it's going to depend on a number of factors. The jury is still out of our ultra protection.
Develop in the next few years.
And if you look at the entire catalyst segment and stuff.
Hum.
Years, though the PJM price develop and because.
That has some impact from the the margin level as well difficult to make out there today.
<unk> I am not as negative as debt.
And some observers are regarding.
Yeah.
This business segment.
And it is helpful. Thank you and we'll look at for the future market and.
Thank you.
And again.
The next question comes from Jason <unk> from Bank of America. Please go ahead with your question.
Hello, Good morning Ah ha.
Hi, Mark price Silicon and thank you for taking my question.
I would like to.
To understand and it'll be a.
That's for <unk>.
And what's going on with the with the cobalt effects in your in Euro and Euro.
Synergy in surface technologies Division.
When it comes to the I understand that's cobalt has pressured the margin and he is a net negative as a result of the prices being up.
Can you just explain to me why that's the case and he's and.
For Europe facing similar.
The other problem with nickel or whether it's specific cobalt for cobalt tissue. Thank you.
Our highest reported.
It is specific to cobalt.
Today, and it is really relative to the supply and demand balance for and or cobalt.
Total to input materials, and we're not talking.
And at both cobalt and metals, we're talking about.
Input materials for our refineries.
And whether it's hydroxide or they're in pure form.
And also to the material.
And the supply is.
It's somewhat short of demand.
And today I would share it means that there is a significant and theres been since the beginning of this year or soon at the end of last year and beginning of this year a very significant.
I would say increase and the payables for this for these.
Raw materials and indeed.
Yeah.
Okay. Thank you.
Our next question comes around and I know my news from Redburn. Please go ahead with your question.
Hi, good morning.
Just on the on the ramp up of the Poland.
Could you give us an idea of.
And the ramp up schedule sort of looks like you know how long it's going to take to get from you know.
And first commercial volumes and start of next year.
Complete.
So that's 100% utilization.
Okay.
Plot from run off.
Well, hopefully as fast as possible and Cleveland.
So realistically speaking with debt it will take it will take a while because the qualification for around the typically.
Tedious and and lengthy that's 1 and secondly, it takes the time line for.
Good morning.
Physical and the effective ramp up of the line so difficult to to.
And it gives you I.
I would say.
And accurate.
Figure to elaborate.
And time to 2 to 2 <unk>.
And for Us, but I would say, it's not a matter of weeks. That's a it's a matter of months may take a year or sooner and more slightly more than a year to.
To ramp up both via the capacity so it's a.
Which is normal for this type of complex and operations.
And <unk>.
And the.
Model and especially for new operation.
And for a greenfield.
Okay. Thanks, and then just to clarify that and so by the end of 2.
2022, the plants will be will have no spare capacity lastest and sort of things guys, Japan nominated and nominally in the index.
And that's a rough timeframe.
And at the bottom line and that's why we have already initiated.
The next wave of ex for the first wave of expansion.
And the plan as you will recall from the communication.
And we did a few months ago.
Because we need to.
Graeme too with the additional capacity.
Sometime in 2023 already.
Absolutely great. Thank you very much.
Yeah.
Our next question comes from the line of Geoff Haire from UBS. Please go ahead your question.
Good morning, Mark.
Revenue I, just wonder if I could ask about the S&P.
Reported 7% increase and sales.
But yet you talked about and very strong demand for cobalt products, but also for us while on and can obviously see that and the market.
And I just it seems to be a bit of a disconnect as to why sales are so low year on year.
And for like some of the businesses within it.
Growing so strongly I was wondering and explain that.
Yeah.
Good morning, Joe.
The.
The volume growth and some of these businesses for us.
Somewhat offset by negative currency effects, which.
Sure.
Mentioned, a moment ago and these are materials and that were material enough for you to be mentioned if my recollection is correct the 25 and in Europe.
And the first half so that's a big big amount.
So just 6 months of the operation and secondly.
So for this significant material negative effect from day to cobalt for refining.
Activities, which also come and for them.
And to go and so these are the key.
Elements of that.
And then explained this upper and this.
Connect between the.
Sales and earnings.
We had no debt.
And when I say Cai.
Correctly, and just had a follow up.
And what's the impact the negative impact from cobalt refineries was not bigger than the FX.
Pat.
And so we'd prefer and up to.
To quantify that.
It's material enough to be mentioned.
Okay. Thank you.
Our next question comes from the line of Ethan.
<unk> from Jpmorgan. Please go ahead with your question.
Yeah, Hi, JP and actually.
Few questions first.
Mike.
Can you.
Sort of help us understand how much of it.
And benefit.
That you are expecting for full year film PGM prices for both already seen in first half.
And if possible.
Feasible and once again.
How much of that force between recycling.
And the.
Catalysis Division.
And the second question was I'm curious.
Given the rhodium price moves that we've seen and the last 2 months why is that $50 million.
For the logo and.
Any insights that would be useful.
Good morning, and check on.
I'll take the first part and we've released.
For the second part of your questions here for this.
There is a majority of the $2.15, and the first half.
Which is also understandable if you look at the price movements.
The first offer and particular, despite that we've seen and the close of the first.
First of all from the current level, which is somewhat lower than what we saw earlier this year for <unk>.
And the first half and.
And in terms of.
The.
Distribution and the majority of the large majority of the affected and recycling.
Okay.
Yes, absolutely.
And that should have good morning for the next question. This is just for deal.
The overall mix of these precious metals and 1 of them.
The $2.50, we first mentioned in April was based on the average prices of the first the first quarter and as we know and after you've seen that change to the current prices seem to be continued.
Continued for the second.
And second half from these are lower.
But that's the impact you see for the first.
Obviously, we have the effective process.
Which are very similar if you take the mix too.
And the average of the first quarter, while now for the second half.
And these prices you specifically relate.
Due to volume and deep to for US for volume is lower so that's the the mix effect that you added debt.
Thank you.
Our next question comes from the line of stained and Mr. From <unk>. Please go ahead with your question.
Good morning.
Cash is on the MST and the <unk>.
Press release, you state that Europe has surpassed China in terms of NMC demand, if I'm right Europe still sell for a less full is ease and China about 500000 versus those $2 million and China and the first half so what explains the slower and and fee intensity in China.
And how do you see this strength evolve and perhaps related what is your view on the recent chemistry makes announcement by a major western Oems.
My question. Thank you and good luck, Mark Ritchie for a future endeavors.
Thing.
And good morning.
And the markets.
The markets are really very different and that's.
China and Europe, so it's difficult to compare the best selling models and China by far are.
Low cost lower range for the vehicles and by lower and Wyoming.
Acres with.
For electric vehicles for Barclays of some 10 kilowatts.
That's all right.
10 to 12.15 kilowatt hour.
And while in Europe.
The full EBITDA being sold are typically have batteries when an expense of 40 or 50 kilowatt hours.
And the Suvs, which are set and western Europe.
And will this.
And the compact Suvs and the other 2 moving to attract setting whether it be these and Europe typically have batteries are ranging from 60 to 85 kilowatt for us so it's a completely different mix.
And the vehicles and battery sizes debt.
And you've seen both market, which explains debt with a lower.
And basically the number you have a much higher.
Battery demand expressed and began work hours and you.
Europe and China.
Secondly, because of the.
The range of requirements and the.
Our model lineup so that you have.
And the different regions.
And I have more.
1.2 and F b adoption, while Europe was not.
And this explains also the year the disciplines and the pace of growth of the NFC market and the 2 regions.
And Thats I would say in a nutshell what explains the.
And that evolution.
Thank you and maybe to follow up I mean, do you see a risk that this lf.
Thus the spread to Europe, given some some announcements made in recent months.
Yes.
Not so much concerned by announcements.
I look at.
For the whats and the pipeline and what's in the qualification programs for this and together on the technology roadmap spoke of.
For customers and in a way.
I think that.
The.
RSP is being used as some sort of a way to express.
Debt.
Debt car makers need a lower cost solution.
And for certain.
I would say segments of the market and.
I think that it remains to be seen what kind of coming through what kind of technology would be utilized.
To fulfill these.
Affordability and requirements.
In order to be able to combine them with the required.
Range, albeit the desire.
And requirements for Alpha.
And the European customers for consumers.
So and what could it do so I'm not concerned because defining factor.
The.
NMC.
And growth prospects.
Globally.
And in Europe, and in North America, and and elsewhere.
And I mean, the and the growth is for gigantic anyways and the.
The next 10 years debt.
It could be half due to productivity and growth.
As for blockchain ramp up but in any case.
Understood do you think it's also use current rates suppressed pricing for example, and empty.
No because the cost models are completely different and.
I would like here also to remind.
The current pricing for and if the is totally.
Unsustainable that goes to.
Chinese just it's only produced in China auto for spare capacity and sold in many instances below cost so.
This is totally unsustainable and debt.
And if new investments for it to be made especially outside of China, you would arrive at a completely different picture for that technology.
1 has to bear in mind that at a certain point and time.
Consumers and car loans. It also has to work and.
It incorporates the cost per recycling.
And look like batteries, and the picture and the cost of recycling and.
He batteries for pretty much higher than the cost of recycling and.
And see baseball basketball, because in a way the pump and metal content.
And then see batteries is very close to paying for the recycling while.
For LST batteries, there is a significant supplements to be to be to be paid in order to have these between soccer because.
And use of the raw materials is insignificant.
Okay. Thank you. Thank you that's very helpful.
The next question comes from the line.
And when post from KBC Securities. Please go ahead with your question.
Thank you and good morning, I just wanted to follow up on the discussion and EMC and in China and can you maybe elaborate a little bit on the pricing conditions for NMC and is the market's groats and that's you know that's where you start to see also.
Also in China and be it a bit skewed towards RFP, but is the market growth already leading to the signs of improvement of pricing conditions in China, and nuts and can you maybe and give it to your view on how long the.
Pricing pressure might and taken yet any thoughts from that.
Hiring.
And I wish I could have given you a positive answer.
The price for developments in China and.
And unfortunately I can't.
And I have to stick.
Thank you and to what I've said.
A few months ago, and a year ago debt.
The current market remittance market currently remains and.
Per capacity and.
This is not conducive to 2 positive price developments and iPhone and see that for changing in the next 12 to 18 months.
For for 24 months remains to be seen at which bank the overcapacity.
Would it be would be absorbed from the dimension the market down.
And that makes for.
For me.
Battery size and from a chemistry point of view auto food and channel them.
In other regions so.
Sure firm I am and nuts.
And I'm positive about the prospects of a price improvement I don't see them.
Now and.
And I was nuts bank for investing in the short term.
Okay and can thank you and.
And I'm, sorry, and no deterioration either aspects.
Another point that suggest that.
Happy to teach and third to what I've said for a year ago or 6 months ago or 3 months.
Okay, great and thank you very much.
Our next question comes from the line of <unk> Joshi, now and withdraw from Goldman Sachs. Please go ahead with your question.
Hi, Good morning, Marc Good morning, Filip and thanks for taking my questions I've got 2 the first 1 is on auto production I think theirs.
The supply side and semiconductor shortages are fairly well understood, but I was wondering if you could give a sense of how you think demand levels are and if you think that the production shortages. This year should be seen as phasing additional volume growth for umicore into next year.
And then the second question is on catalysis.
And so just wondering if you could remind us of any incremental regulatory drivers heading into 2020.2 and if you think about the moving parts for next year, where do you see increased content and higher car production is more important or the potential for lower PGM prices is the bigger swing factor. Thank you.
For the genome.
Hum.
And of course 2 provinces.
And.
There is no net.
And your Stephan.
And machinery conditions.
Coming up for next year actually even bigger and bigger.
And the full service for 1 taking place as we speak and China would be a nationwide adoption of China 6 norms for heavy duty.
And.
And it has had a positive impact.
And the first part of this year because.
And lastly orders for and trying to hoard cash.
Technologies and China 5 trucks.
Before the move up to the China 6 so there would probably be.
And for inter Metro.
For several months before we see China's steel demand picking up but more significantly and.
And this should continue throughout the ramp up for China.
Continued throughout 2022.
Once this thing for Mexico, and said if it all works and that's where the major maybe the Covid change and the Detroit, Terry and the medium term.
And the discussions as you might know regarding euro 7 and I'm trying to 7 and are still open.
And it's difficult to make out today.
And exactly what the content will be Oh euro 7 and when it will be introduced clearly the trend is and if that's the tolerance for pollution and decreasing and the need to address the delay the laughter and micro.
Microgram.
The amount of brands with pollution and whether it's the second remission is there and and should be addressed through the the next wave.
Recognition, but again exactly when and how the split them out.
This is difficult to make out now.
The.
Industry projections for.
And for next year or more.
Alex a reliable and and do materialize the.
And the volume impact would be there for us and Dubai duty segment.
And that's I mean, I've I've seen some studies and some projections showing debt.
Volume.
And Coproduction.
<unk> production volumes could.
Recovered to the 2019 levels pre COVID-19 to the pre COVID-19 levels.
And if that materializes commodity.
The volume effect will be for us for Shockwave and the.
And the effect of the interest.
Station.
And then the Gen boxes again truly belt and see I just would like to remind you that we have some interest.
In place already for 2022 and 2.
<unk> expense for 2023.
So, but we are also.
To help provide.
From a predictability and the <unk>.
On the chip.
Going back to your first question on the chip closer to I mean, this is really difficult to make out to date.
And.
I mean for the visibility is actually the picture is really complicated.
And so I'm trying to understand.
And I wouldn't dare to say is that percentage.
Because.
It's not only a matter of our overall.
Overall, our production volumes of these Oh please.
Semiconductor chips and salsa natera mix effects.
And it goes.
And the chips cannot be.
Easily.
Moving from 1 platform to the other and functional corporate customers are ordering and.
And the intention of auto pay per click being certified that already.
And we also have.
Very limited visibility on that.
And how many vacancies and being prepared.
And just to be chip revenue.
And a way and how all of that and.
In fact, the <unk>.
Production cost for that once the chips for the.
Chip supply will start to normalize so.
It's really difficult to.
To make out from where things.
Presumably going.
Assuming that for the chip closer to win.
So a part of line and with senior housing stuff and.
<unk>.
Thank you very much and wish you best of luck and thank you for.
Sure.
Our next question.
So with the line of Alex Stewart from Barclays. Please go ahead with your question.
Hello, and thank you for taking my other questions I've got 2 I'd say, that's okay could you confirm whether you're.
Net working capital position and recycling is positive or negative and otherwise.
Debt.
And kind of payables.
And between us and taxes will be all the way round will be.
Very helpful and perhaps.
Neutral.
And then secondly, I think at the end of last year, you talked about 50 million and high cost and he and S. T lease rate for that study this year and I believe that about half of that for 25 million was related to higher DNA.
And I, and Korea, and China, but your D&A charge and the first half and he and S T and Dr.
3.4 million or 5.3 million year on year, So am I right and thinking of DNA would be up 25 million and does that mean that we're going to exceed the hold impact and the second half. If you could reconcile those comments would be very helpful. Thank.
Hey, good morning, Alex So first of all on the working capital and recycling.
We will refrain from giving you an absolute number but you know that this is by definition and low working capital business..1 of the attractiveness of recycling is that the flow and capital employed and specifically and working capital.
So that's a given.
We've indicated that for this first half of the year, we've seen a reduction in working capital. So that means that it's the way, even though with and it was last year again with the caveat of what I mentioned, the kind of 1 off effects in June.
We're a big part of that which actually and recycling so thats.
When you to be extrapolated from so it's definitely and you clearly see that they'll spend and return on capital employed of the segment working capital is indeed very low.
Allow me to refrain from giving an absolute number and.
Terms of the $50 million of.
Costs increased.
And specifically.
And all 3 of the question DNA and your question was from DNA, So the DNA and Eden and he NSP only went up slightly <unk> debt I.
I mean, there's a couple of factors and that festival, you know that and.
The equivalent of specialty materials, we are we have this I.
I mean, clearly the footprint adjustment. This restructuring so that has I would say some impact.
The DNA, but more importantly on RPM.
You should see typically we stop and DNA when the.
And the lines are.
And utilized so you should see somewhat of an acceleration in the second half in terms of the DNA charges going up and that was definitely continue.
Into next year, as we will wrap up the smart.
And sorry, if I, if I could just elaborate and Matt because I was under the impression that actually the 25 million of idea and a this year within the 50 million and guidance was DNA for the Korea, and China plants, rather than the European plant.
Assumption.
But the majority is meant to come from the startup of the Poland plant envision and the spin off of the year.
And.
And the other increase authority I think the other.
The other factor the cost increase and also to a large expense related.
2 the start of the commissioning and the qualification and cost of the new allowing the Europe.
<unk> H 2 loans.
And then H 1.
Indeed and.
What is.
Distributors and the more evenly and other across that.
Across semesters and stepped up and R&D efforts and the <unk>.
Business group, So east coast desktops and pieces already there.
That's really helpful. Thank you if I could just sneak in 1 last very short question.
You've explicitly cool down between 2.5 million.
FX impact and you asked here and the first.
First half and said, they're not material, which is why and quoting it out, but it's really only 4% on revenue and umicore and to the best and minorities never spits out the currency impact from any of its divisions and any period.
So why is it that you felt the need to explicitly mentioned and a 4% currency headwinds and the first half for this year and he and S. T I'd be interested.
And your thoughts on that just competitively. Thank you.
The COVID-19.
I mean, there wasn't for compelling need us to do that but I thought we felt that it was useful to mention because in a way and it's starting to our current 2 pilots because of the current the trend has been against US for 3 years now looking at the evolution.
And the.
Some games and currencies and non.
Asian currencies as well against the Euro and.
And we felt we should have done debt when it started there and.
Against this never.
Never too late and.
And because it's starting to accumulate we thought it was meaningful.
And mature enough to dimension.
Yes.
Well.
Yeah.
Do we have other questions Barbara.
Okay.
Yes.
Okay.
Okay.
Hum.
Sure.
Yes.
Good day.
Okay.
And now.
Yes.
And then Steve I think your language disconnected and reconnecting your dot com, Okay. Thank you Barbara.
And welcome.
And you're back on.
Okay.
And so authority, we have the technical hiccup affirmed for the.
So do we have.
What are the following questions.
Barbara.
So you were answering and Mr and next to it.
Yes, I could do ounces I'd go down and so any thank you very much passing thank you so much.
Thank you.
Okay now we're going to the next question and it comes from the line of Freddie and Fannie out from Unfilled. Please go ahead with your question.
Hi.
Mark just.
A question really on the <unk>.
Syed conceptually.
We don't progress on Silicon anodes.
Robert Let me ask it differently, if we progress on Silicon Anodes do you think the market would then on the capital side shift really to high nickel cathodes. So basically what I'm asking is is the anode today, the graphite anode today sort of a bottleneck for increase.
And adoption for the high nickel cathodes and in a world, where you know we switched to silicon anodes, what do you see lsp's future and the technology. That's my first question and secondly, just around market share.
It's obviously very difficult to reconcile numbers, but.
You know it seems.
And at least from the outside in debt.
And of your Korean peers are growing way faster than you are or you actually are confident and comfortable that you haven't really lost any share.
Or is.
Is there is there a case, where some of your platforms are not growing as strongly as others. Thanks, a lot and wish you.
Very good luck I hope you don't pass all your tips on disclosure.
To the new CEO, but.
Joking aside thanks, a lot for for everything.
Good morning, and yes, sorry for these upon throughout the stores.
Part of my first for the first injection session of Ics was indeed.
All the kids all about.
And not disclosing what we don't want to disclose so and sorry, I should've talked.
Talked beforehand.
Do element.
And last.
Questions and.
The on the silicon and at what point so.
The.
Adoption of highly for the technology is moving ahead.
And a way without waiting for a day.
And the adoption of the Silicon composite I know at least and the first wave.
We are indeed, and getting closer to where the line okay.
And it's a bottleneck and this can still be managed by the battery cell makers as I understand it.
And their battery designs and this being said we see some some.
Confirmation that our novel and old materials.
Be required and our own technology.
Roadmaps.
And the battery makers in order to continue to increase our capacity to remove that potential bottleneck as we move to higher density under the cathode clients. Indeed, so I'm pretty positive about the prospects for <unk>.
And you are nodes.
And.
The and all programs are also moving ahead as you know from the previous.
Sessions, so we have.
And our products and our.
And onward.
And for you, which are where we are sampling to a.
And number of customers and and also being simple as I explained a while ago.
Introduction of these new technologies, typically goes first and through non automotive applications and.
And that is the stage.
Which is that at this stage, which has been a pause.
And today, we are.
And reaching out to and increasingly so.
And more systematically too.
Automotive related and its estimates for <unk>.
Customers for related.
All these applications and sorry.
And it's yeah.
Besides the I don't have a I would.
C a precise picture.
And how the anode and cathode interaction and works and.
And this is notwithstanding and the way of for what we're doing and tell you before in any case.
And also keep market share.
And the market share for you on the market share side.
Our market shares.
Yes give or take a few a few basis points.
They are relatively stable, but you have mix effects from 1.
Semester to the other 1.1 yet for the other depending on how well your models offsetting or not and.
Ours may influence the.
The growth.
And.
Over a certain period of time, and the and relative terms to others.
Total time my experience is that the effects tend to even out.
And especially as a portfolio of platforms.
So just to get more diversified and the future deals takes I should say it should be less.
He was a bird.
And in a way.
Thanks, a lot and good luck.
And our next question comes from the line of.
From Redburn. Please go ahead with your question.
Yeah, great. Thank you for having me and again and I, probably just for like the secondaries sentiments around disclosure as well.
But my question really is on the the.
The contribution from recycling from.
E M. P. M M I understand the sort of supernormal earnings down.
Captured in the 250 million.
Million Euro PGM benefit so it's kind of and I was wondering if you could give us an idea of sort of what the.
Running and not part of the businesses as well.
Thank you.
Net revenue for <unk>.
Firstly I can confirm that for the.
The contribution from P. M and is not included there is not reflected in the $2.50.
And indeed, and we prefer not to be explicit.
About.
And being able to figure it.
It is indeed unusually high.
Okay, and what would you expect the second half and and that part of the business to be similar to the first no actually notes.
Actually North Dakota.
And I look at the current trends the volatility is somewhat less.
And then oh much less than it was and the first part of the year and much less so than.
At the time, we soda despite net.
And the precious metal prices. So I don't expect the same trading contributed the same contribution from trading activities in the second part of the year it will be much more.
More normalized I would expect.
But difficult to measure.
And I think because the makeup obviously because the.
And for the sake of making forecasts and and projections that we have to make certain metal price assumptions.
And.
In our model and the metal price or soon to be.
Flat, which is not very conducive to volatility and.
So the reaction that.
Based on what I see today, I expect a much lower contribution.
Great. Thank you very much and best of luck for the future.
And Karen.
At this stage, we'll take 1 last question and it comes from the line of Geoff Haire from UBS. Please go ahead.
Hi, Thank you for that the auction and ask another question I just wondered what you made of see Atl's announcement yesterday.
Moving and the sodium ion batteries by 2023.
The same is IMAX from most announcements.
I'm not too much move, thereby by announcements.
Both by facts and driven by price and debt.
And and market realities.
And so the Miami boat zone, our technology roadmap and speak for a while.
And.
For people to Alrosa horizon, 3 materials for a very long term for beyond the 10 years and.
And.
It's.
In theory, it's a it's a chemistry debt.
And it could have some attraction for for applications because of power density is.
These are meant to be a pretty good.
However, the and interest entity and <unk>.
Instantly low and much lower than that and a focus of mine and even much more than a.
And tomorrow and phosphate.
Even with the improvements that are there.
Has alluded to the shops too.
And hypothetical and win at retail.
I don't think that this is a material that a recompete for.
A range of applications for and the automotive segment and anytime soon.
Or even at all.
But could be interesting to see if they make the.
And the declared and glue.
And so there could be interesting to see how that would.
Cannibalize our.
Chemistry.
And is there I see Norway for a snow day.
And 2 you compete with.
And those applications, which require range because energy density and physically.
As for and assess to a certain extent to do with the low voltage at which this for kind of speak and work.
Okay. Thank you.
So at this day.
H I N T.
Thank you and Barbara and at this stage and I would like to thank you once again for not only up and in the call. This morning.
More generally for.
Following umicore for so many years and debt.
The line spending support or interest and the company as I mentioned, a while ago and it has been as I mentioned, the REIT a privilege for me.
And to interact with you for so many years actually I mentioned initially since 2000 and that's it.
And some of you and some of the veterans and their own Google call debt.
And I want to CFO.
Between 2000, and 2006 and so my earnings call go back to 2000 for.
And the 20 plus years of of interactions, which are being extremely rewarding to me.
And and at this stage I would like to wish you, all very well keep well and.
Alright.
Ladies and gentlemen, thank you for your participation today and this.
Concludes today's conference you may now disconnect your lines. Thank you.
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